Mandatory Disclosure in Corporate Debt Restructuring via Schemes of Arrangement: A Comparative Approach

21 Pages Posted: 19 Mar 2021 Last revised: 19 Jan 2022

See all articles by Wai Yee Wan

Wai Yee Wan

City University of Hong Kong; City University of Hong Kong (CityU) - Centre for Chinese & Comparative Law

Casey Watters

Bond University

Date Written: March 9, 2021

Abstract

Creditors often face significant information asymmetry when debtor companies seek to restructure their debts. In the United Kingdom, it is mandatory for debtor companies, seeking to invoke the courts’ jurisdiction to restructure their debts via schemes of arrangement (schemes), to disclose material information in the explanatory statement to enable the creditors to make an informed decision as to how to exercise their votes in creditors’ meetings.

The English schemes have been transplanted into common law jurisdictions in Asia, including Hong Kong and Singapore. However, due to the differences in the shareholding structures and the kinds of debts that are sought to be restructured in the UK and Hong Kong/Singapore, this transplantation gives rise to the question as to whether information asymmetry is in fact adequately addressed in the scheme process. Drawing from the experiences of Hong Kong and Singapore, we argue that there are three principal concerns in the current disclosure regimes: how debtors disclose the liquidation analysis or alternative to restructuring via schemes; how debtors disclose advisors’ fees; and the equality of provision of information in the scheme process.

Suggested Citation

Wan, Wai Yee and Watters, Casey, Mandatory Disclosure in Corporate Debt Restructuring via Schemes of Arrangement: A Comparative Approach (March 9, 2021). International Insolvency Review (2021, Forthcoming), City University of Hong Kong School of Law Legal Studies Research Paper No. 2021(1)-001, Available at SSRN: https://ssrn.com/abstract=3807669

Wai Yee Wan (Contact Author)

City University of Hong Kong ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

City University of Hong Kong (CityU) - Centre for Chinese & Comparative Law ( email )

83 Tat Chee Avenue
Room P5300, 5th Floor, Academic 1
Kowloon Tong
Hong Kong

Casey Watters

Bond University ( email )

Gold Coast, QLD 4229
Australia

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